Sales forecasting by brands academy

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Sales Forecasting At Colgate Palmolive Pakistan Limited

Introduction
Colgate Palmolive Pakistan Limited is operated as a franchise of Colgate Palmolive Co. (US-based) by Lakson group companies.
Its located at Lakson square building no. 2 office near zainab market karachi.


It has been a major player in the health care sector through its valuable and innovative solutions particularly in the oral care, personal care, surface care and fabric care.

Company offerings are quite successful in generating brand loyalty and demand for the products, as it has been able to generate the increase in the net revenue and gross profit by 22.7% and 8.6% respectively.

Target increase in market share was clearly achieved in the YR2011 by attaining an increase of 1.42% in the net profit. Rs. 14,150 million was the annual net sales of YR11 with gross profit of Rs.4,161 million.
Focus of Our Report
Our report focuses mainly on the “Sales Forecasting”.
Our analysis and findings are focused to Colgate GRF (great regular flavor) brand’s forecasting techniques and issues related to the scope of Sales manager.
We have interviewed
National, Regional & Area managers of Karachi,
and some merchandisers in order attain trade insights and market norms regarding forecasting practices.
Estimation of Industry sales
Colgate GRF & its Competitors
Top of mind brand in this category is Colgate GRF as being market leader with 59% share

Whereas Medicam & Pepsodant are the direct competitor for Colgate GRF having 20% & 3% respectively

The 18% share is with other competitors like forhans etc.

Colgate GRF is a supreme profit generating factor and therefore termed as “Cash Cow” for CP Pakistan.

Market potential
Colgate tooth paste with all its brands like Herbal, Misvaak, Maxfresh, etc. that contains nearly 55% of the market share as of whole toothpaste category in YR2011.
Sales in volume were not shared.
Rs. 4161m(Sales of YR11) /0.55 (Colgates share in YR11)= Rs.7565m (Category sales in YR11)
20% of expected increase so expected total category sales would be Rs.7565 X 1.20 = Rs.9078m
Rs.9078m is the market potential.

Sales potential
Colgate aims to grab 58% to 60% of the market share by the end of June YR13.
For this some new brands are in pipeline of brand extension plan. The launch of Colgate Sensitive is part of launch and share boosting plan.

Sales potential is Rs.5266m to Rs.5447m
Annual Forecast table for Colgate GRF

YR12 expected sales of 150gms tube are 15% due to 2-3 brush pack schemes.
Stock keeping unit information
Colgate GRF is available in 130 different stock keeping units (SKUs) which are
50grams for Rs.40
75grams for Rs.58
100grams for Rs.72
150grams for Rs.100
200grams for Rs.125
 
Distributor margin is 5.5%
Retail Margin is 7%

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Sales forecasting by brands academy

  1. 1. Sales Forecasting At Colgate Palmolive Pakistan Limited Sunday August 19, 2012 ________________________Submitted to_________________________ Sir Saeed Ur Rehman _____________________Submitted by_____________________ Saad Baadar Zakir M. Bilal Omer Bin Saleem Syed Wahaj Hussain Team Facilitator
  2. 2. • • Colgate Palmolive Pakistan Limited is operated as a franchise of Colgate Palmolive Co. (US-based) by Lakson group companies. Its located at Lakson square building no. 2 office near zainab market karachi. Oral Care Toothpaste Sparkle Toothbrushes • Personal Care New Palmolive Naturals Azadi Carbolic Soap Protex Surface Care Max Bar Azadi Dish Bar Max Scourers Max liquid Max Antibacterial Fabric Care Brite Maximum Power Brite Antibacterial Express Power Bonus It has been a major player in the health care sector through its valuable and innovative solutions particularly in the oral care, personal care, surface care and fabric care.
  3. 3. • Company offerings are quite successful in generating brand loyalty and demand for the products, as it has been able to generate the increase in the net revenue and gross profit by 22.7% and 8.6% respectively. • Target increase in market share was clearly achieved in the YR2011 by attaining an increase of 1.42% in the net profit. Rs. 14,150 million was the annual net sales of YR11 with gross profit of Rs.4,161 million.
  4. 4. • Our report focuses mainly on the “Sales Forecasting”. • Our analysis and findings are focused to Colgate GRF (great regular flavor) brand’s forecasting techniques and issues related to the scope of Sales manager. • We have interviewed – National, Regional & Area managers of Karachi, – and some merchandisers in order attain trade insights and market norms regarding forecasting practices.
  5. 5. • Top of mind brand in this category is Colgate GRF as being market leader with 59% share • Whereas Medicam & Pepsodant are the direct competitor for Colgate GRF having 20% & 3% respectively • The 18% share is with other competitors like forhans etc. • Colgate GRF is a supreme profit generating factor and therefore termed as “Cash Cow” for CP Pakistan.
  6. 6. YEAR Colgate GRF Medicam Pepsodant Others TOTAL Market Share 2012E 2011 59.2% 59.0% 19.0% 20.0% 2.8% 3.0% 19.0% 18.0% 100.0% 100.0% 2010 58.7% 21.2% 3.0% 17.1% 100.0%
  7. 7. • Colgate tooth paste with all its brands like Herbal, Misvaak, Maxfresh, etc. that contains nearly 55% of the market share as of whole toothpaste category in YR2011. • Sales in volume were not shared. – Rs. 4161m(Sales of YR11) /0.55 (Colgates share in YR11)= Rs.7565m (Category sales in YR11) – 20% of expected increase so expected total category sales would be Rs.7565 X 1.20 = Rs.9078m • Rs.9078m is the market potential.
  8. 8. • Colgate aims to grab 58% to 60% of the market share by the end of June YR13. • For this some new brands are in pipeline of brand extension plan. The launch of Colgate Sensitive is part of launch and share boosting plan. • Sales potential is Rs.5266m to Rs.5447m
  9. 9. SKU wise Units (in cartons) YEAR 2012E 2011 2010 2009 2008 2007 30gram s N/S N/S N/S N/S N/S N/S 50grams 75grams 1,448 1,231 1,259 1,077 919 866 2,263 2,052 2,043 1,761 1,452 1,349 100grams 150grams 200gram s 3,439 1,358 543 3,283 1,000 310 2,978 957 302 2,239 762 212 1,985 669 199 1,798 617 153 1 carton contains 72packs E=Expected/Budgeted N/S=Not supplied 9,051 7,876 7,539 6,051 5,224 4,783 SKU wise Units (in cartons) 4000 3500 3000 2500 2000 1500 1000 500 0 30grams TOTAL 50grams 2012E 75grams 2011 2010 100grams 2009 2008 150grams 2007 200grams
  10. 10. YEAR 2012E 2011 2010 2009 2008 2007 30grams N/S N/S N/S N/S N/S N/S SKU wise forecast share in % 50grams 75grams 100grams 150grams 16.0% 25.0% 38.0% 15.0% 16.0% 26.0% 41.0% 13.0% 16.7% 27.1% 39.5% 12.7% 17.8% 29.1% 37.0% 12.6% 17.6% 27.8% 38.0% 12.8% 18.1% 28.2% 37.6% 12.9% 200grams 6.0% 4.0% 4.0% 3.5% 3.8% 3.2% TOTAL 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 2007 2008 200grams 150grams 2009 100grams 2010 75grams 50grams 2011 30grams 2012E 0 • 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 YR12 expected sales of 150gms tube are 15% due to 2-3 brush pack schemes.
  11. 11. • Colgate GRF is available in 130 different stock keeping units (SKUs) which are - 50grams for Rs.40 - 75grams for Rs.58 - 100grams for Rs.72 - 150grams for Rs.100 - 200grams for Rs.125 • Distributor margin is 5.5% • Retail Margin is 7%
  12. 12. • Growth comparison is carried on the basis of comparing same periods of the current and last year. • For example the comparison of March’12 will be done with March’11. And similarly the case is in quarterly and monthly comparison. • This helps to keep a bird eye view on the progress of sales towards goal. If any deviation is observed timely action is taken to meet targets.
  13. 13. Sku Wise forecasting Extension Wise forecasting Brand wise forecasting Category forecasting Industry foreasting
  14. 14. > Qualitative methods which they normally uses: - Jury of executive opinion - Sales force composite - Survey of buyers intention > Quantitative method which they normally uses: - Continuity extrapolation - Time series analysis
  15. 15. • Colgate defines target for next period according to industry expected size. • Forecasting periods are defined as short term, medium term and long term. • Area manager defines his forecasting term in days as under: Long term > 365 days /1 year Medium term > 3 months / quarterly Short term > 30 days /1 month
  16. 16. • If forecasted units sets out to be more than or less than the actual for more than two quarters, area manager is required to call a meeting with SBT- Sales & budgeting team to inquire the reasons for so much deviation in the forecasted volume.
  17. 17. • Most Critical activity • Must be carried out with due diligence • Failure to do so may result in inaccurate forecasts.
  18. 18. • What if sales forecast is overstated ? • What if sales forecast is understated ? To further investigate the impact we asked the following questions;
  19. 19. • Who is responsible for making a sales forecast ? Ans: Sales & Budgeting Team • Which department makes most accurate contribution in the sales forecasting procedure? Ans: Marketing Department
  20. 20. • In case of conflicting estimates, what strategy does the company adopts to reach to a conclusion? Ans: Close Integration Consensus Buffer
  21. 21. • In case of a conflict with in departmental estimates, which department’s estimates are given more weight? Ans: Marketing Department Reason... » Continuous Engagement in Mkt Research » Customer Oriented Approach
  22. 22. • How accurate are the forecasts made in comparison to actual sales activity? Ans: 75-85% • What is the acceptable level of deviation between actual sales and sales forecast? Ans: 10-15 %
  23. 23. • What is the impact of differences in sales forecasts and actual sales activity? a. If forecast> actual b. If forecast< actual
  24. 24. • After every 3months, a review is carried by each area sales manger to ensure his direction. This review meeting consists participation from zonal managers, SBT members and sales supervisors along with their area manager. • Area mangers at IMTs are required a 3month review report but the carry and maintain weekly reports to meet the accuracy in meeting their targets.
  25. 25. – http://investor.colgate.com/annual.cfm – http://www.brecorder.com/component/news/si ngle/592/0/1211418/ – http://www.zonebourse.com/COLGATEPALMOLIVE-COMPANY12089/pdf/232331/ColgatePalmolive%20Company_SEC-Filing-10Q1.pdf

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